Hong Kong’s stablecoin bill passed with little fanfare recently. Yet across Asia’s financial centres, the legislation has focused minds. The city has quietly created the region’s first mandatory licensing regime for digital currencies, a strategic gambit to retain its position as Asia’s financial capital.
The new law, overseen by the Hong Kong Monetary Authority (HKMA), applies to any stablecoin pegged to the Hong Kong dollar or issued locally. It requires one-to-one reserve backing, a minimum capital of HK$25 million (US$3.19 million) and quarterly audits. More ambitiously, it grants Hong Kong authority over any foreign stablecoin promoted, marketed or made available to the public in Hong Kong, a direct challenge to regulatory arbitrage elsewhere.
While competitors hedge their regulatory bets, Hong Kong has made a different wager: that institutional investors value clarity and transparency over tax incentives and regulatory arbitrage. In doing so, Hong Kong has pulled ahead.
Singapore introduced a voluntary framework in 2023, allowing unlicensed operation if issuers avoid public marketing (and comply with existing regulation). The United Arab Emirates still restricts stablecoin and only recently began implementing comprehensive rules. Hong Kong’s approach is mandatory, detailed and already operational through a pilot sandbox.
The ordinance plugs into the broader digital infrastructure the city has quietly built to reassert its financial supremacy. The Securities and Futures Commission now licenses virtual-asset platforms. Asia’s first spot bitcoin and ether exchange-traded funds (ETFs) are listed in Hong Kong.
Under Project Ensemble, tokenised bonds, green finance and cross-border trade settlements are being retooled for real-time blockchain execution. The regime is porous by design, facilitating settlement rather than creating regulatory walls. Stablecoin provides the missing piece: a regulated medium of exchange that can settle transactions between platforms, investors and tokenised assets.
